You raise prices with existing clients by sending a short price increase letter 30 to 60 days ahead, naming the new price and the effective date in the first two lines, tying the increase to the value and level of service they already receive, and offering one clear alternative for anyone who cannot absorb it. Done that way, most firms keep 85% or more of their book. The data backs the move: four out of five accounting and tax firms said they would raise fees in 2026, most by 5% to 10%, and billing rates for tax prep and planning are climbing at a 10.8% year-over-year rate. If your prices have not moved in three years, that is not loyalty. That is you leaving money on the table and funding your clients' growth out of your own profit margins.
I have watched this play out with dozens of accounting firms, bookkeepers, and local service businesses. The fear is always identical: "If I raise my prices, my loyal clients will leave." The reality is usually far less dramatic. One CPA firm that pushed prices up 30% lost 8% of its client list, and the accounts that walked were the ones eating the most hours for the least money. The problem is rarely the number. It is the delivery.
This article walks the exact sequence: how to tell you underprice your work, how much to increase prices and how often, when to send the notice, what to say, and how to handle the three objections you will actually hear. It also shows where a price change fits inside the Convert Smart Growth System, our Get Found, Land Client, Retain and Grow framework. Pricing is a Retain and Grow move, and it only works cleanly when the first two phases are already doing their job.
How Do I Know If I Am Actually Underpriced?
Before you write a single letter, get honest about the gap. Underpricing shows up in patterns, not in feelings. Here is the checklist I run with clients:
- 1. Your effective hourly rate has fallen. Take one client's annual fee and divide it by the hours your team actually spends on them. Compare that to your target. If a $400-per-month bookkeeping client now takes nine hours a month because they added payroll and a second entity, you are working for roughly $44 an hour.
- 2. Scope crept and nobody renegotiated. Extra entities, more transactions, a new state filing, quarterly calls that used to be annual. Scope creep is the single most common reason a profitable engagement turns into a losing one.
- 3. Nobody pushes back on price. If you have not lost a deal on fee in twelve months, your pricing sits below what the market will bear. A healthy close rate on new work is somewhere around 50% to 70%, not 100%. Zero resistance means you have misread your clients' willingness to pay.
- 4. Your costs moved and your prices did not. Software, salaries, insurance, and compliance risk all went up. The average base charge for a Form 1040 with schedules hit $236, up from $162 two years earlier, a 45.7% nominal jump. Flat pricing across that window is a real pay cut.
- 5. You dread certain client names in your inbox. That flinch is data. High-maintenance plus underpriced is the exact combination a price increase is designed to fix.
Pro tip: run a profitability sort before you decide anything. List every client, their annual fee, and your best estimate of hours. Sort by fee per hour. The bottom 20% of that list is where your increase should be biggest, and where you should be most comfortable losing a few names.
How Much Should I Increase Prices, and How Often?
Most firms that handle this well settle on an annual baseline of 5% to 15%, with bigger corrections reserved for engagements where scope genuinely expanded or where the original pricing structure was set years ago and never revisited.
Here is how I think about the tiers:
- Inflation and rising costs adjustment (3% to 8%). The routine, unremarkable increase. It needs almost no justification and rarely triggers a conversation. Firms that run regular increases every year avoid the painful 40% correction later. Delaying price increases is what turns a small ask into a fight.
- Scope correction (15% to 40%). Use this when the work has objectively grown. Document what changed: transaction volume, entities, filings, meeting cadence. In the client's mind this is not really a price hike, it is a re-pricing of a different engagement, which makes it far easier to accept.
- Market correction (40% or more). Reserve this for clients priced years ago who now sit dramatically below your current rates. Expect some attrition and plan for it. Give more notice, and consider two smaller steps six months apart rather than one large jump.
On frequency: annually, on a fixed schedule. Predictability is the whole trick. A client who knows every January brings a modest adjustment barely registers it. A client who gets nothing for four years and then a 45% jump feels ambushed, and they are right.
The cleanest long-term fix is a clause in your engagement letter. Something like: "Fees are reviewed annually and adjusted by a minimum of 5% on the engagement anniversary, or by the change in the Consumer Price Index, whichever is greater, confirmed in writing at least 30 days in advance." After that, price reviews are not a request. They are an agreement the client already signed.
Should I Add Value or Restructure Into Tiers?
The strongest pricing strategy pairs the new price with a visible reason to believe it. You do not have to invent work. You have to make existing work legible.
Two approaches beat a flat increase almost every time.
- Add value the client can name. A quarterly 20-minute review call, a one-page cash flow summary with the monthly close, a year-end planning email in November. Small, cheap for you, and it makes the higher price reflect the value in a way the client can point to. If you can add value that costs you two hours a year and supports a 10% increase, take that trade every time.
- Restructure into tiers. Give each client a good, better, best choice instead of a single new number. One firm ran every increase as a value conversation, showing each client the tier that genuinely fit their situation with clear trade-offs, and hit a 94% acceptance rate. Tiers turn a yes-or-no into a which-one, and a which-one is a much easier conversation. Premium clients often self-select up, which is where your best margin lives.
Whichever route you choose, make the change visible on the invoice. Show the new rates as a line item with the service description beside them. A vague invoice invites a phone call. A specific one closes the loop.
When Should I Send the Price Increase Notice?
Timing does more work than wording. Three rules:
Give 30 to 60 days of notice. Thirty days is the floor for routine adjustments. Sixty is better for anything above 15%, and 90 days suits a large market correction on a long-standing client. Notice is a trust signal. Short notice reads as a squeeze.
Avoid your client's worst week. For accountants, that means not the week of a filing deadline. For seasonal service businesses, not the middle of your busiest stretch. You want them thinking clearly, not defensively.
Anchor it to a natural boundary. Calendar year, fiscal year, or the engagement anniversary. "Effective January 1" feels like policy. "Effective next Tuesday" feels like a decision someone made about them personally.
One piece of timing most firms skip: send the increase after a win, never after a mistake. If you just cleaned up a messy reconciliation, caught a deduction, or delivered a report they praised, that is the moment your value is most visible. Value first, then price. Same logic that makes a strong client onboarding sequence work: prove competence before you ask for anything.
How Do You Tell Clients You Are Increasing Prices?
Short, confident, specific. The most common failure is the urge to over-explain, which reads as guilt and invites negotiation. A price increase letter has five jobs and nothing else.
- 1. State the new price and the effective date in the first two sentences.
- 2. Give one honest reason, not five.
- 3. Restate the value they already get, in their language.
- 4. Offer one clear option for anyone who needs a different fit.
- 5. Thank them and close with a date.
Here is a template you can adapt today:
Subject: Your 2027 engagement fee
Hi [Name],
Starting January 1, your monthly fee moves from $600 to $700. Nothing about your service changes, and you do not need to do anything.
Two things drove this. Your transaction volume is up roughly 40% since we set this price in 2024, and our costs for software, staffing, and compliance coverage have risen alongside it. This is the first adjustment we have made to your account in three years.
At that level of service you continue to get monthly reconciliations, quarterly review calls, your year-end package prepared and filed, and direct access to me by email or phone within one business day.
If the new rates do not work for your budget, tell me and I will walk you through a lighter tier that will. Either way, I would rather have the conversation than have you wonder.
Thanks for three good years. Happy to jump on a quick call before the 1st if that helps.
[Your name]
Notice what is missing. No apology. No paragraph about how difficult the decision was. No vague gesture at "rising costs across the industry." Clients respect an owner who prices with a straight face.
For your top ten accounts, do not send an email at all. Call first, then send the written confirmation the same day. Five minutes of conversation before a letter is the difference between a client feeling informed and a client feeling processed.
How Do I Handle Pushback From Clients?
You will hear three objections. Prepare all three and the conversation stops being scary.
"That is a large jump." Agree with the observation, then reframe on time. "It is, and that is on me. I should have adjusted 3% a year instead of holding flat for three years. Going forward you will see a small annual review so this never lands like a surprise again." Owning the delay defuses most of the resistance.
"Can you match what I was paying?" Never discount the same scope. Adjust the scope to match the budget instead. "I can hold you near your current rate if we move quarterly calls to twice a year and shift the year-end package into a separate engagement. Want me to price that version?" Now the negotiation is a choice between two real options, not an argument about one number.
"I need to think about it." Give them a date and a next step. "Totally fair. I will follow up Thursday. In the meantime, tell me what you want to think through, the number or the value?" That single question surfaces the actual objection. We go deeper on this pattern in our piece on why prospects ghost after the discovery call, and the psychology is identical.
Then there is the fourth response: silence, followed by a resignation. Let it happen. Federal Reserve Bank of Richmond research found that even a 1% price increase can lift annual customer turnover from 14% to 21%, so some churn is mathematically normal. The question is not whether anyone leaves. It is whether the ones who leave were profitable. Lose 10% of your clients who represented 4% of revenue and 25% of your hours and that is not a loss. That is a cleanup. Price-sensitive customers who churn also free capacity for new customers who arrive at your current rates.
Where Does Pricing Fit in the Convert Smart Growth System?
Raising prices is a Retain and Grow play, and it is far safer when Get Found and Land Client already work.
- Get Found. With a steady flow of inbound inquiries, a price increase carries almost no risk, because a departing client gets replaced at your new price. Firms with no visibility feel trapped by every account. That is why local SEO for accountants and a well-optimized Google Business Profile sit underneath your pricing power. Demand is leverage.
- Land Client. Your website has to sell the value your new price assumes. If your site still reads like a brochure, prospects anchor on price because you gave them nothing else to weigh. Clear positioning, visible social proof, real trust signals, and a specific call to action are what make a higher price point feel reasonable. Our breakdown of what should be on a tax firm's homepage covers exactly what to fix.
- Retain and Grow. This is where price reviews live, next to onboarding, communication cadence, and referrals. Firms that invest in client retention and stay visible between engagements earn the right to charge more. Consistent email nurturing through the year means your January notice does not arrive from a stranger. And the natural extension of a pricing conversation is often an upsell, which is how firms turn one-time tax clients into year-round clients.
The order matters. Underpriced and invisible? Fix visibility first, then price. Underpriced and busy? Price now.
Frequently Asked Questions
How do you tell clients you are increasing prices?
Lead with the new price and the effective date, give one honest reason, restate the value they already receive, and offer one lighter option for anyone who needs it. Send it in writing 30 to 60 days ahead. Call your top accounts first, then confirm by email the same day. Keep it under 200 words and do not apologize.
How many clients will I lose if I raise my prices?
Most firms that communicate a well-structured increase lose under 15% of their client base, and often far less. One CPA firm that raised prices 30% lost 8%. The clients who leave are typically the most price-sensitive and highest-maintenance accounts, so revenue usually drops less than headcount and profit per hour usually rises.
Should I grandfather my long-term clients at their old rate?
Rarely, and never permanently. Grandfathering punishes loyalty in reverse: your longest clients end up subsidized by your newest ones, and the gap compounds every year. A better middle ground is a phased increase, half now and half in six months, or a 60-day grace period at current rates before the new price starts.
What if a client asks me to justify the increase in detail?
Give one reason, not a spreadsheet. Point to concrete changes in their engagement: transaction volume, added entities, extra filings, more meetings. If scope has not changed, say plainly that prices have been flat for several years while costs have not. Over-explaining signals uncertainty, and clients negotiate hardest against uncertainty.
How often should I review my prices?
Once a year, on a fixed date, for every client. Build the clause into your engagement letter so the review is automatic rather than a decision you have to work up the nerve to make. Annual regular increases of 5% to 8% are almost never questioned. Four years of silence followed by one large jump almost always is.
Your Next Move
Pick five clients tonight. Calculate their fee per hour. Choose the two with the worst numbers and draft their notice using the template above. Send it with a 60-day effective date. That is the whole first step, and it takes under an hour.
If the deeper problem is that you cannot afford to lose anyone because new business is inconsistent, pricing is not your bottleneck. Visibility is. That is exactly the gap the Convert Smart Growth System closes: get found by the right clients, land them with a site that sells, then retain and grow them at prices that actually reflect your work.
Want a second opinion on where your firm leaks margin and where your website costs you leverage? Book a Free Growth Call and we will map it out together.